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1. Suppose that the tax rate is 50% and the probability of getting caught evading taxes is 10% plus an additional 5% for every $10,000
1. Suppose that the tax rate is 50% and the probability of getting caught evading taxes is 10% plus an additional 5% for every $10,000 in tax evasion. (Hence, P = 0.1 + 0.05X, where X is measured in $10,000s of evasion.) Individuals who are caught evading taxes will be forced to pay the taxes they owe in addition to a $30,000 penalty a) What is the expected benefit of evading $100,000? b) What is the expected cost of evading $100,000? c) How much evasion will a risk-neutral taxpayer engage in
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